Fitch has also downgraded the rating on $1.4 billion of the Maine Municipal Bond Bank's general resolution bonds to A+ from AA-.

The New York rating agency cites Maine's "persistent budget gaps despite repeated balancing actions'' in reaching its decision to downgrade.

State Treasurer Neria Douglass says the rating situation can be improved. Douglass says the Fitch report does find some positives, such as responsive financial management with frequent reviews of economic forecasts, and a stable but growing economy.

Ratings set benchmarks for how much interest companies will have to pay to sell bonds. The higher the grade, the lower the interest rate a borrower must pay.